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CA Final · Financial Reporting · Financial Instruments: Disclosures

Kaveri Infra Ltd's draft risk note gives a table of sensitivity figures for interest rate and currency risk but no narrative on how management views, manages or mitigates these risks. The auditor cites the Ind AS 107 principle on qualitative and quantitative disclosures. Which view is consistent with paragraph 32A?

Paragraph 32A says qualitative disclosures should accompany quantitative disclosures, because their interaction lets users link related information, form an overall picture of the nature and extent of risks from financial instruments, and better evaluate the entity's exposure. A bare sensitivity table without narrative falls short of this.

  1. AQuantitative tables alone are sufficient, as qualitative narrative is only permitted for non-financial risks
  2. BQualitative disclosures should be given in the context of quantitative disclosures, because the interaction helps users link related disclosures and evaluate the entity's exposure to risksCorrect
  3. CQualitative disclosures replace quantitative disclosures when the entity's exposure is considered insignificant by management
  4. DQualitative disclosures are required only in the first year of applying Ind AS

Explanation

Paragraph 32A says that providing qualitative disclosures in the context of quantitative disclosures lets users link related disclosures and form an overall picture of the nature and extent of risks. The interaction between the two better enables users to evaluate exposure. Hence a table without narrative does not meet that objective.

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